The ONE Group Reports Second Quarter 2023 Financial Results
- Total GAAP revenues increased by 2.8% to $83.4 million in Q2 2023.
- Consolidated comparable sales increased by 46.5% compared to 2019.
- The company plans to open eight to twelve new venues in 2023.
- The total addressable market is 200 STK restaurants globally and 200 Kona Grills domestically.
- Consolidated comparable sales decreased by 4.7% compared to 2022.
Opens Kona Grill in
To Participate in Three Upcoming Investor Conferences
Highlights for the second quarter compared to the same period in 2022 are as follows:
-
Total GAAP revenues increased
2.8% to from$83.4 million ;$81.1 million -
Consolidated comparable sales* decreased
4.7% and increased46.5% compared to 2019; -
GAAP net income attributable to The ONE Group was
, or$0.6 million per share ($0.02 adjusted net income per share)****, compared to GAAP net income of$0.06 , or$4.1 million per share ($0.13 adjusted net income per share)****$0.15 -
Restaurant Operating Profit*** decreased
6.6% to from$11.9 million ; and$12.8 million -
Adjusted EBITDA** was
compared to$8.5 million .$10.4 million
“We faced meaningful comparisons to last year as comparable sales in 2022 increased
Hilario continued, “We expect to open eight to twelve new venues in 2023 and target a new restaurant approximately every four to six weeks for the foreseeable future. We expect the significant investments we have made in our training teams, in-restaurant staffing and in G&A support will begin to show positive returns as we enter this new chapter of growth at The ONE Group. We believe we are early in our expansion story and have significant opportunity ahead, and we view our total addressable market as 200 STK restaurants globally and 200 Kona Grills domestically with best-in-class ROIs of between
*Comparable sales represent total
**We define Adjusted EBITDA as net income before interest expense, provision for income taxes, depreciation and amortization, non-cash impairment loss, non-cash rent expense, pre-opening expenses, non-recurring gains and losses including incremental costs related to COVID-19, stock-based compensation and certain transactional costs. Adjusted EBITDA has been presented in this press release and is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. Refer to the reconciliation of Net Income to Adjusted EBITDA in this release.
***We define Restaurant Operating Profit as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses. Restaurant Operating Profit has been presented in this press release and is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. Refer to the reconciliation of Operating income to Restaurant Operating Profit in this release.
****We define Adjusted Net Income as net income before COVID-19 costs, lease termination expenses, one-time stock-based compensation, non-recurring costs, non-cash rent during the pre-opening period and the income tax effect of any adjustments. Adjusted Net Income has been presented in this press release and is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. Refer to the reconciliation of Net Income to Adjusted Net Income in this release.
Second Quarter 2023 Financial Results
Total GAAP revenues increased
Total owned restaurant net revenues increased
Consolidated comparable sales* decreased
Management, license and incentive fee revenues decreased
Restaurant Operating Profit*** decreased
General and administrative costs increased
Pre-opening expenses were
GAAP net income attributable to The ONE Group Hospitality, Inc. in the second quarter of 2023 was
Adjusted Net Income**** attributable to The ONE Group Hospitality, Inc. in the second quarter of 2023 was
Adjusted EBITDA** decreased
Restaurant Development
The Company intends to open eight to twelve new venues in 2023.
There are currently four Company-owned STK restaurants (
During the first quarter of 2023, the Company opened a Kona Grill in
Share Repurchase
On September 7, 2022, the Company commenced a share repurchase program for up to
2023 Targets
The Company is updating the following targets for 2023:
Financial Results and Other Select Data |
|
2023 Guidance |
Total GAAP revenues |
|
|
Managed, license and incentive fee revenues |
|
|
Total owned operating expenses as a percentage of owned restaurant net revenue |
|
|
Total G&A excluding stock-based compensation |
|
|
Consolidated Adjusted EBITDA |
|
|
Restaurant pre-opening expenses |
|
|
Operating income |
|
|
Effective income tax rate |
|
|
Total capital expenditures, net of allowances received by landlords |
|
|
Number of new system-wide venues |
|
Eight to Twelve |
Conference Call and Webcast
Emanuel “Manny” Hilario, President and Chief Executive Officer, and Tyler Loy, Chief Financial Officer, will host a conference call and webcast today at 4:30 PM Eastern Time.
The conference call can be accessed live over the phone by dialing 1-412-542-4186. A replay will be available after the call and can be accessed by dialing 1-412-317-6671; the passcode is 10179885. The replay will be available until August 17, 2023.
The webcast can be accessed from the Investor Relations tab of The ONE Group’s website at www.togrp.com under “News / Events”.
Upcoming Investor Conference Participation
The Company plans to participate in the following upcoming investor conferences:
-
The Company will meet in-person with institutional investors at the Lake Street 7th Annual Big Ideas Growth Conference on September 14, 2023 in
New York City . - The Company will meet virtually with institutional investors at the CL King's 21st Annual Best Ideas Conference on September 18, 2023.
-
The Company will meet in-person with institutional investors at the Wells Fargo 6th Annual Consumer Conference on September 20-21, 2023 in
Dana Point, CA.
About The ONE Group
The ONE Group Hospitality, Inc. (Nasdaq: STKS) is an international hospitality company that develops and operates upscale and polished casual, high-energy restaurants and lounges and provides hospitality management services for hotels, casinos and other high-end venues both in the
-
STK, a modern twist on the American steakhouse concept with 25 restaurants in major metropolitan cities in the
U.S. ,Europe and theMiddle East , featuring premium steaks, seafood and specialty cocktails in an energetic upscale atmosphere. -
Kona Grill, a polished casual, bar-centric grill concept with 26 restaurants in the
U.S. , featuring American favorites, award-winning sushi, and specialty cocktails in an upscale casual atmosphere. -
ONE Hospitality, The ONE Group’s food and beverage hospitality services business, develops, manages and operates premier restaurants and turnkey food and beverage services within high-end hotels and casinos currently operating 13 venues in the
U.S. andEurope .
Additional information about The ONE Group can be found at www.togrp.com.
Cautionary Statement on Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “target,” “intend,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements, including but not limited to: (1) the effects of the COVID-19 pandemic on our business, including government restrictions on our ability to operate our restaurants and changes in customer behavior, and our ability to hire employees; (2) our ability to open new restaurants and food and beverage locations in current and additional markets, grow and manage growth profitably, maintain relationships with suppliers and obtain adequate supply of products and retain employees; (3) factors beyond our control that affect the number and timing of new restaurant openings, including weather conditions and factors under the control of landlords, contractors and regulatory and/or licensing authorities; (4) our ability to successfully improve performance and cost, realize the benefits of our marketing efforts and achieve improved results as we focus on developing new management and license deals; (5) changes in applicable laws or regulations; (6) the possibility that The ONE Group may be adversely affected by other economic, business, and/or competitive factors; and (7) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed for the year ended December 31, 2022 and Quarterly Reports on Form 10-Q.
Investors are referred to the most recent reports filed with the Securities and Exchange Commission by The ONE Group Hospitality, Inc. Investors are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
THE ONE GROUP HOSPITALITY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited, in thousands, except income per share and related share information) |
||||||||||||||||
|
|
For the three months ended June 30, |
|
For the six months ended June 30, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Owned restaurant net revenue |
|
$ |
79,923 |
|
|
$ |
76,930 |
|
|
$ |
158,502 |
|
|
$ |
147,446 |
|
Management, license and incentive fee revenue |
|
|
3,470 |
|
|
|
4,195 |
|
|
|
7,447 |
|
|
|
7,860 |
|
Total revenues |
|
|
83,393 |
|
|
|
81,125 |
|
|
|
165,949 |
|
|
|
155,306 |
|
Cost and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Owned operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Owned restaurant cost of sales |
|
|
19,215 |
|
|
|
19,851 |
|
|
|
38,070 |
|
|
|
37,950 |
|
Owned restaurant operating expenses |
|
|
48,784 |
|
|
|
44,309 |
|
|
|
95,611 |
|
|
|
83,682 |
|
Total owned operating expenses |
|
|
67,999 |
|
|
|
64,160 |
|
|
|
133,681 |
|
|
|
121,632 |
|
General and administrative (including stock-based compensation of |
|
|
8,039 |
|
|
|
7,261 |
|
|
|
15,523 |
|
|
|
14,140 |
|
Depreciation and amortization |
|
|
3,506 |
|
|
|
2,926 |
|
|
|
7,162 |
|
|
|
5,641 |
|
Pre-opening expenses |
|
|
1,609 |
|
|
|
804 |
|
|
|
2,908 |
|
|
|
1,149 |
|
COVID-19 related expenses |
|
|
— |
|
|
|
221 |
|
|
|
— |
|
|
|
2,534 |
|
Lease termination expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
255 |
|
Other expenses |
|
|
195 |
|
|
|
— |
|
|
|
352 |
|
|
|
— |
|
Total costs and expenses |
|
|
81,348 |
|
|
|
75,372 |
|
|
|
159,626 |
|
|
|
145,351 |
|
Operating income |
|
|
2,045 |
|
|
|
5,753 |
|
|
|
6,323 |
|
|
|
9,955 |
|
Other expenses, net: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net of interest income |
|
|
1,642 |
|
|
|
444 |
|
|
|
3,429 |
|
|
|
952 |
|
Total other expenses, net |
|
|
1,642 |
|
|
|
444 |
|
|
|
3,429 |
|
|
|
952 |
|
Income before provision for income taxes |
|
|
403 |
|
|
|
5,309 |
|
|
|
2,894 |
|
|
|
9,003 |
|
(Benefit) provision for income taxes |
|
|
(13 |
) |
|
|
869 |
|
|
|
148 |
|
|
|
1,042 |
|
Net income |
|
|
416 |
|
|
|
4,440 |
|
|
|
2,746 |
|
|
|
7,961 |
|
Less: net (loss) income attributable to noncontrolling interest |
|
|
(152 |
) |
|
|
137 |
|
|
|
(428 |
) |
|
|
(12 |
) |
Net income attributable to The ONE Group Hospitality, Inc. |
|
$ |
568 |
|
|
$ |
4,303 |
|
|
$ |
3,174 |
|
|
$ |
7,973 |
|
Currency translation gain (loss) |
|
|
52 |
|
|
|
(169 |
) |
|
|
(18 |
) |
|
|
(261 |
) |
Comprehensive income attributable to The ONE Group Hospitality, Inc. |
|
$ |
620 |
|
|
$ |
4,134 |
|
|
$ |
3,156 |
|
|
$ |
7,712 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to The ONE Group Hospitality, Inc. per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net income per share |
|
$ |
0.02 |
|
|
$ |
0.13 |
|
|
$ |
0.10 |
|
|
$ |
0.25 |
|
Diluted net income per share |
|
$ |
0.02 |
|
|
$ |
0.13 |
|
|
$ |
0.10 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares used in computing basic income per share |
|
|
31,782,783 |
|
|
|
32,601,203 |
|
|
|
31,730,299 |
|
|
|
32,411,570 |
|
Shares used in computing diluted income per share |
|
|
32,673,457 |
|
|
|
33,959,991 |
|
|
|
32,779,821 |
|
|
|
34,123,142 |
|
The following table sets forth certain statements of operations data as a percentage of total revenues for the periods indicated. Certain percentage amounts may not sum to total due to rounding.
|
|
For the three months ended June 30, |
|
For the six months ended June 30, |
||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
Revenues: |
|
|
|
|
|
|
|
|
||||
Owned restaurant net revenue |
|
95.8 |
% |
|
94.8 |
% |
|
95.5 |
% |
|
94.9 |
% |
Management, license and incentive fee revenue |
|
4.2 |
% |
|
5.2 |
% |
|
4.5 |
% |
|
5.1 |
% |
Total revenues |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
Cost and expenses: |
|
|
|
|
|
|
|
|
||||
Owned operating expenses: |
|
|
|
|
|
|
|
|
||||
Owned restaurant cost of sales (1) |
|
24.0 |
% |
|
25.8 |
% |
|
24.0 |
% |
|
25.7 |
% |
Owned restaurant operating expenses (1) |
|
61.0 |
% |
|
57.6 |
% |
|
60.3 |
% |
|
56.8 |
% |
Total owned operating expenses (1) |
|
85.1 |
% |
|
83.4 |
% |
|
84.3 |
% |
|
82.5 |
% |
General and administrative (including stock-based compensation of |
|
9.6 |
% |
|
9.0 |
% |
|
9.4 |
% |
|
9.1 |
% |
Depreciation and amortization |
|
4.2 |
% |
|
3.6 |
% |
|
4.3 |
% |
|
3.6 |
% |
Pre-opening expenses |
|
1.9 |
% |
|
1.0 |
% |
|
1.8 |
% |
|
0.7 |
% |
COVID-19 related expenses |
|
— |
% |
|
0.3 |
% |
|
— |
% |
|
1.6 |
% |
Lease termination expenses |
|
— |
% |
|
— |
% |
|
— |
% |
|
0.2 |
% |
Other expenses |
|
0.2 |
% |
|
— |
% |
|
0.2 |
% |
|
— |
% |
Total costs and expenses |
|
97.5 |
% |
|
92.9 |
% |
|
96.2 |
% |
|
93.6 |
% |
Operating income |
|
2.5 |
% |
|
7.1 |
% |
|
3.8 |
% |
|
6.4 |
% |
Other expenses, net: |
|
|
|
|
|
|
|
|
||||
Interest expense, net of interest income |
|
2.0 |
% |
|
0.5 |
% |
|
2.1 |
% |
|
0.6 |
% |
Total other expenses, net |
|
2.0 |
% |
|
0.5 |
% |
|
2.1 |
% |
|
0.6 |
% |
Income before provision for income taxes |
|
0.5 |
% |
|
6.5 |
% |
|
1.7 |
% |
|
5.8 |
% |
(Benefit) provision for income taxes |
|
— |
% |
|
1.1 |
% |
|
0.1 |
% |
|
0.7 |
% |
Net income |
|
0.5 |
% |
|
5.5 |
% |
|
1.7 |
% |
|
5.1 |
% |
Less: net (loss) income attributable to noncontrolling interest |
|
(0.2 |
)% |
|
0.2 |
% |
|
(0.3 |
)% |
|
— |
% |
Net income attributable to The ONE Group Hospitality, Inc. |
|
0.7 |
% |
|
5.3 |
% |
|
1.9 |
% |
|
5.1 |
% |
(1) | These expenses are being shown as a percentage of owned restaurant net revenue. |
THE ONE GROUP HOSPITALITY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share information) |
||||||||
|
|
|
|
|
|
|
||
|
|
June 30, |
|
December 31, |
||||
|
|
2023 |
|
2022 |
||||
ASSETS |
|
(Unaudited) |
|
|
|
|||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
38,178 |
|
|
$ |
55,121 |
|
Accounts receivable |
|
|
9,486 |
|
|
|
15,220 |
|
Inventory |
|
|
5,765 |
|
|
|
5,728 |
|
Other current assets |
|
|
2,344 |
|
|
|
2,091 |
|
Due from related parties |
|
|
376 |
|
|
|
376 |
|
Total current assets |
|
|
56,149 |
|
|
|
78,536 |
|
|
|
|
|
|
|
|
||
Property and equipment, net |
|
|
111,509 |
|
|
|
94,087 |
|
Operating lease right-of-use assets |
|
|
88,538 |
|
|
|
85,161 |
|
Deferred tax assets, net |
|
|
12,311 |
|
|
|
12,323 |
|
Intangibles, net |
|
|
15,312 |
|
|
|
15,290 |
|
Other assets |
|
|
4,738 |
|
|
|
4,774 |
|
Security deposits |
|
|
850 |
|
|
|
853 |
|
Total assets |
|
$ |
289,407 |
|
|
$ |
291,024 |
|
|
|
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
11,767 |
|
|
$ |
13,055 |
|
Accrued expenses |
|
|
18,277 |
|
|
|
22,409 |
|
Deferred gift card revenue and other |
|
|
1,274 |
|
|
|
2,115 |
|
Current portion of operating lease liabilities |
|
|
6,444 |
|
|
|
6,336 |
|
Current portion of long-term debt |
|
|
1,000 |
|
|
|
1,500 |
|
Other current liabilities |
|
|
253 |
|
|
|
256 |
|
Total current liabilities |
|
|
39,015 |
|
|
|
45,671 |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Operating lease liabilities, net of current portion |
|
|
110,251 |
|
|
|
105,247 |
|
Long-term debt, net of current portion |
|
|
71,102 |
|
|
|
70,544 |
|
Other long-term liabilities |
|
|
896 |
|
|
|
972 |
|
Total liabilities |
|
|
221,264 |
|
|
|
222,434 |
|
|
|
|
|
|
|
|
||
Commitments and contingencies (Note 15) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Stockholders’ equity: |
|
|
|
|
|
|
||
Common stock, |
|
|
3 |
|
|
|
3 |
|
Preferred stock, |
|
|
— |
|
|
|
— |
|
Treasury stock, 1,691,649 and 1,094,572 shares at cost at June 30, 2023 and December 31, 2022, respectively |
|
|
(11,322 |
) |
|
|
(7,169 |
) |
Additional paid-in capital |
|
|
56,561 |
|
|
|
55,583 |
|
Retained earnings |
|
|
27,340 |
|
|
|
24,166 |
|
Accumulated other comprehensive loss |
|
|
(2,887 |
) |
|
|
(2,869 |
) |
Total stockholders’ equity |
|
|
69,695 |
|
|
|
69,714 |
|
Noncontrolling interests |
|
|
(1,552 |
) |
|
|
(1,124 |
) |
Total equity |
|
|
68,143 |
|
|
|
68,590 |
|
Total liabilities and equity |
|
$ |
289,407 |
|
|
$ |
291,024 |
|
Reconciliation of Non-GAAP Measures
We prepare our financial statements in accordance with generally accepted accounting principles (GAAP). In this press release, we also make references to the following non-GAAP financial measures: total food and beverage sales at owned and managed units, Adjusted EBITDA, Restaurant Operating Profit and Adjusted Net Income.
Total food and beverage sales at owned and managed units. Total food and beverage sales at owned and managed units represents our total revenue from our owned operations as well as the revenue reported to us with respect to sales at our managed locations, where we earn management and incentive fees at these locations. We believe that this measure represents a useful internal measure of performance as it identifies total sales associated with our brands and hospitality services that we provide. Accordingly, we include this non-GAAP measure so that investors can review financial data that management uses in evaluating performance, and we believe that it will assist the investment community in assessing performance of restaurants and other services we operate, whether or not the operation is owned by us. However, because this measure is not determined in accordance with GAAP, it is susceptible to varying calculations and not all companies calculate these measures in the same manner. As a result, this measure as presented may not be directly comparable to a similarly titled measure presented by other companies. This non-GAAP measure is presented as supplemental information and not as an alternative to any GAAP measurements. The following table includes a reconciliation of our GAAP revenue to total food and beverage sales at our owned and managed units (in thousands):
For the three months ended June 30, |
For the six months ended June 30, |
|||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
||||
Owned restaurant net revenue (1) |
|
$ |
79,923 |
|
$ |
76,930 |
|
$ |
158,502 |
|
$ |
147,446 |
Management, license and incentive fee revenue |
|
3,470 |
|
4,195 |
|
7,447 |
|
7,860 |
||||
GAAP revenues |
|
$ |
83,393 |
|
$ |
81,125 |
|
$ |
165,949 |
|
$ |
155,306 |
Food and beverage sales from managed units (1) |
|
|
30,001 |
|
|
32,197 |
|
|
60,703 |
|
|
60,469 |
|
|
|
|
|||||||||
Total food and beverage sales at owned and managed units |
|
$ |
109,924 |
|
$ |
109,127 |
|
$ |
219,208 |
|
$ |
207,915 |
(1) | Components of total food and beverage sales at owned and managed units. |
The following table presents the elements of the quarterly Comparable Sales measure for 2022 and 2023:
|
|
2022 vs. 2021 |
|
2023 vs. 2022 |
||||||||||||
|
|
Q1 |
Q2 |
Q3 |
Q4 |
FY |
|
Q1 |
Q2 |
|||||||
US STK Owned Restaurants |
|
57.1 |
% |
17.8 |
% |
4.0 |
% |
0.2 |
% |
15.7 |
% |
|
1.0 |
% |
(10.1 |
%) |
US STK Managed Restaurants |
|
103.6 |
% |
26.6 |
% |
2.1 |
% |
(0.8 |
%) |
21.9 |
% |
|
15.4 |
% |
2.5 |
% |
US STK Total Restaurants |
|
66.7 |
% |
19.8 |
% |
3.5 |
% |
0.0 |
% |
17.1 |
% |
|
5.3 |
% |
(6.8 |
%) |
Kona Grill Total Restaurants |
|
21.9 |
% |
3.7 |
% |
(3.6 |
%) |
(7.6 |
%) |
2.5 |
% |
|
(4.3 |
%) |
(1.5 |
%) |
Combined Comparable Sales |
|
45.1 |
% |
12.8 |
% |
0.5 |
% |
(3.1 |
%) |
10.8 |
% |
|
1.6 |
% |
(4.7 |
%) |
Adjusted EBITDA. We define Adjusted EBITDA as net income before interest expense, provision for income taxes, depreciation and amortization, non-cash impairment loss, non-cash rent expense, pre-opening expenses, non-recurring gains and losses, stock-based compensation, COVID-19 related expense and certain transactional costs. Not all the aforementioned items defining Adjusted EBITDA occur in each reporting period but have been included in our definitions of terms based on our historical activity. Adjusted EBITDA has been presented in this press release and is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP.
The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods indicated (in thousands):
|
|
For the three months ended June 30, |
|
For the six months ended June 30, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net income attributable to The ONE Group Hospitality, Inc. |
|
$ |
568 |
|
|
$ |
4,303 |
|
|
$ |
3,174 |
|
|
$ |
7,973 |
|
Net (loss) income attributable to noncontrolling interest |
|
|
(152 |
) |
|
|
137 |
|
|
|
(428 |
) |
|
|
(12 |
) |
Net income |
|
|
416 |
|
|
|
4,440 |
|
|
|
2,746 |
|
|
|
7,961 |
|
Interest expense, net |
|
|
1,642 |
|
|
|
444 |
|
|
|
3,429 |
|
|
|
952 |
|
(Benefit) provision for income taxes |
|
|
(13 |
) |
|
|
869 |
|
|
|
148 |
|
|
|
1,042 |
|
Depreciation and amortization |
|
|
3,506 |
|
|
|
2,926 |
|
|
|
7,162 |
|
|
|
5,641 |
|
EBITDA |
|
|
5,551 |
|
|
|
8,679 |
|
|
|
13,485 |
|
|
|
15,596 |
|
Pre-opening expenses |
|
|
1,609 |
|
|
|
804 |
|
|
|
2,908 |
|
|
|
1,149 |
|
Stock-based compensation |
|
|
1,234 |
|
|
|
911 |
|
|
|
2,554 |
|
|
|
1,790 |
|
COVID-19 related expenses |
|
|
— |
|
|
|
221 |
|
|
|
— |
|
|
|
2,534 |
|
Lease termination expense (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
255 |
|
Non-cash rent expense (2) |
|
|
(123 |
) |
|
|
(54 |
) |
|
|
(154 |
) |
|
|
(85 |
) |
Other expenses |
|
|
195 |
|
|
|
— |
|
|
|
352 |
|
|
|
— |
|
Adjusted EBITDA |
|
|
8,466 |
|
|
|
10,561 |
|
|
|
19,145 |
|
|
|
21,239 |
|
Adjusted EBITDA attributable to noncontrolling interest |
|
|
(65 |
) |
|
|
211 |
|
|
|
(254 |
) |
|
|
133 |
|
Adjusted EBITDA attributable to The ONE Group Hospitality, Inc. |
|
$ |
8,532 |
|
|
$ |
10,350 |
|
|
$ |
19,400 |
|
|
$ |
21,106 |
|
(1) | Lease termination expense are costs associated with closed, abandoned and disputed locations or leases. |
|
(2) | Non-cash rent expense is included in owned restaurant operating expenses and general and administrative expense on the consolidated statements of operations and comprehensive income. |
Restaurant Operating Profit. We define Restaurant Operating Profit as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses.
We believe Restaurant Operating Profit is an important component of financial results because: (i) it is a widely used metric within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance, and (ii) we use Restaurant Operating Profit as a key metric to evaluate our restaurant financial performance compared to our competitors. We use these metrics to facilitate a comparison of our operating performance on a consistent basis from period to period, to analyze the factors and trends affecting our business and to evaluate the performance of our restaurants.
The following table presents a reconciliation of Operating income to Restaurant Operating Profit for the period indicated (in thousands):
|
|
For the three months ended June 30, |
|
For the six months ended June 30, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Operating income as reported |
|
$ |
2,045 |
|
|
$ |
5,753 |
|
|
$ |
6,323 |
|
|
$ |
9,955 |
|
Management, license and incentive fee revenue |
|
|
(3,470 |
) |
|
|
(4,195 |
) |
|
|
(7,447 |
) |
|
|
(7,860 |
) |
General and administrative |
|
|
8,039 |
|
|
|
7,261 |
|
|
|
15,523 |
|
|
|
14,140 |
|
Depreciation and amortization |
|
|
3,506 |
|
|
|
2,926 |
|
|
|
7,162 |
|
|
|
5,641 |
|
Pre-opening expenses |
|
|
1,609 |
|
|
|
804 |
|
|
|
2,908 |
|
|
|
1,149 |
|
COVID-19 related expenses |
|
|
— |
|
|
|
221 |
|
|
|
— |
|
|
|
2,534 |
|
Lease termination expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
255 |
|
Other expenses |
|
|
195 |
|
|
|
— |
|
|
|
352 |
|
|
|
— |
|
Restaurant Operating Profit |
|
$ |
11,924 |
|
|
$ |
12,770 |
|
|
$ |
24,821 |
|
|
$ |
25,814 |
|
Restaurant Operating Profit as a percentage of owned restaurant net revenue |
|
|
14.9 |
% |
|
|
16.6 |
% |
|
|
15.7 |
% |
|
|
17.5 |
% |
Restaurant Operating Profit by brand is as follows (in thousands):
|
|
For the three months ended June 30, |
|
For the six months ended June 30, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
STK restaurant operating profit (Company owned) |
|
$ |
8,594 |
|
|
$ |
9,469 |
|
|
$ |
19,056 |
|
|
$ |
18,282 |
|
STK restaurant operating profit (Company owned) as a percentage of STK revenue (Company owned) |
|
|
18.9 |
% |
|
|
21.9 |
% |
|
|
20.6 |
% |
|
|
22.2 |
% |
Kona Grill restaurant operating profit |
|
$ |
3,394 |
|
|
$ |
3,353 |
|
|
$ |
5,895 |
|
|
$ |
7,629 |
|
Kona Grill restaurant operating profit as a percentage of Kona Grill revenue |
|
|
9.9 |
% |
|
|
10.0 |
% |
|
|
9.0 |
% |
|
|
11.8 |
% |
Adjusted Net Income. We define Adjusted Net Income as net income before COVID-19 costs, lease termination expenses, one-time stock-based compensation, non-recurring costs, non-cash rent during the pre-opening period and the income tax effect of any adjustments.
We believe that Adjusted Net Income is an appropriate measure of operating performance, as it provides a clear picture of our operating results by eliminating certain one-time expenses that are not reflective of the underlying business performance. Adjusted Net Income is included in this press release because it is a key metric used by management, and we believe that it provides useful information facilitating performance comparisons from period to period. Adjusted Net Income has limitations as an analytical tool and our calculation thereof may not be comparable to that reported by other companies; accordingly, you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
For the three months ended June 30, |
For the six months ended June 30, |
||||||||||||||
2023 |
|
2022 |
2023 |
|
2022 |
||||||||||
Net income attributable to The One Group Hospitality, Inc. as reported |
$ |
568 |
|
|
$ |
4,303 |
|
|
$ |
3,174 |
|
|
$ |
7,973 |
|
Adjustments: |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
COVID-19 related expenses |
- |
|
221 |
|
- |
|
2,534 |
|
|||||||
Non-cash and other pre-opening expenses(1) |
|
1,122 |
|
|
|
224 |
|
|
|
1,548 |
|
|
|
224 |
|
Other expenses |
195 |
|
479 |
|
352 |
|
479 |
|
|||||||
Adjusted net income before income taxes |
|
1,885 |
|
|
|
5,227 |
|
|
|
5,074 |
|
|
|
11,210 |
|
Income tax effect on adjustments(2) |
(81 |
) |
(290 |
) |
(119 |
) |
(1,280 |
) |
|||||||
Adjusted net income attributable to The One Group Hospitality, Inc. |
$ |
1,804 |
|
|
$ |
4,937 |
|
|
$ |
4,955 |
|
|
$ |
9,930 |
|
Adjusted net income per share: Basic |
$ |
0.06 |
|
|
$ |
0.15 |
|
|
$ |
0.16 |
|
|
$ |
0.31 |
|
Adjusted net income per share: Diluted |
$ |
0.06 |
|
$ |
0.15 |
|
$ |
0.15 |
|
$ |
0.29 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares used in computing basic income per share |
31,782,783 |
|
|
32,601,203 |
|
31,730,299 |
|
|
32,411,570 |
|
|||||
Shares used in computing diluted income per share |
|
32,673,457 |
|
|
|
33,959,991 |
|
|
|
32,779,821 |
|
|
|
34,123,142 |
|
(1) | Non-cash and other pre-opening expenses relate to non-cash rent expense and costs for our new store training teams unrelated to new restaurant openings. |
|
(2) | Reflects the tax expense associated with the adjustments for the three and six months ended June 30, 2023, and June 30, 2022. The Company uses its estimated effective tax rate for the current year and for the previous year. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230803331842/en/
Investors:
ICR
Michelle Michalski or Raphael Gross
(646) 277-1224
Michelle.Michalski@icrinc.com
Media:
ICR
Seth Grugle
(646) 277-1272
seth.grugle@icrinc.com
Source: The ONE Group Hospitality, Inc.
FAQ
What were the total GAAP revenues for Q2 2023?
How did consolidated comparable sales perform compared to 2019?
How many new venues does the company plan to open in 2023?